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European aerospace major European Aeronautic Defence and Space Company, parent company of India's largest aircraft supplier Airbus, has directed its European tier-1 outsourcing partners to direct a larger portion of their outsourcing orders from India.
This indirect outsourcing will make EADS' total business outsourced to India grow 10 times by 2020, from the current euro 100 million.
In comparison, the total outsourcing to countries outside Europe will only increase by more than three times in that period, albeit from a far larger base of euro 8 billion.
Industry experts said this indirect outsourcing would be a clear way to rationalise costs. "Manufacturing parts in India would be 30 to 40 per cent more cost-effective, although it does depend on where the manufacturing takes place in India owing to the differential tax structure," said Kapil Kaul, CEO (Indian sub-continent), Centre for Asia Pacific Aviation.
EADS recently invited 11 of its European partners, including aerostructure suppliers like Aernnova, Latecoere, Spirit, Stork Fokker Premium Aerotec (also an EADS subsidiary), and systems and equipment suppliers like Cobham, Eaton, Rockwell Collins, Safran and Thales to Aero India 2009, the defence aero-show held in Bangalore to participate in talks with Indian suppliers.
"During their visit to India, the European sourcing partners met with potential Indian partner industrialists. While relationships were established, the partners are still exploring opportunities," an EADS spokesperson said in response to a questionnaire from Business Standard.
EADS companies Airbus and Eurcopter have been directly outsourcing to India for more than two decades.
EADS is not the only aerospace giant to be partnering with India in a major way. US-based aircraft manufacturer and rival Boeing has partnered 37 Indian private and public Indian companies while bidding for the medium multi-role combat aircraft for the Indian Air Force.
Boeing has also signed a contract with the Tata group to manufacture floor beams for its 787 Dreamliner aircraft. The company has a 10-year memorandum of understanding with HAL intended to bring more than $1 billion of new aerospace manufacturing work to India.